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Vietnam Government Encourages Supporting Industries

By Dezan Shira & Associates
Posted: 13th March 2013 09:18
In 2010 and 2011, the Vietnamese Government issued a number of policies to encourage supporting industries, especially those connected to the high-tech sectors (Prime Minister’s Decision No 12/2011/QD-TTg).
Supporting industries play a key role in promoting the development of Vietnam’s main industries. Furthermore, the potential to develop Vietnam’s service industries is great as it has abundant a labor supply and a strong capacity to absorb and incorporate new technologies.
Strengthening service industries will also reduce the number of imports of any necessary industry products (Vietnam’s imports have outnumbered its exports in recent years, which has been a major factor in Vietnam’s current trade imbalance).
Specifically, the Government aims to develop the following supporting industries:
  • Mechanical engineering;
  • Electronics & informatics;
  • Manufacturing and assembly of automobiles;
  • Textiles and garments;
  • Leather-footwear; and
  • Supporting industries for high-tech industry development.
Within these industries, each eligible project (including manufacturing projects for materials, spare parts, accessories and semi-finished products) may receive the following incentives:
Market development
  • Free advertisement and introduction on the Ministry of Industry and Trade website and provincial-level Departments of Industry and Trade websites;
  • Prioritization to receive funds from trade and investment promotion programs; and
  • Government-created opportunities to form product and service supply networks for high-tech industry projects.
Infrastructure establishment
  • Prioritization for support and allocation of land (in terms of location, area and rent rate)
Science and technology and human resource training
  • Support from the National Scientific and Technological Development Fund (and other funds related to scientific and technological activities) that may be used to cover expenses arising from technology transfers, design copyright purchases, software purchases and the hiring of foreign experts; and
  • Funds from the state budget to partially cover expenses for human resource training.
Information provision
  • Updated information on related legal documents; and
  • Support from government-sponsored technical assistance programs, such as the e-portals of Ministries, branches and People’s Committees of any provinces and centrally-controlled cities.
  • Import and export duty incentives under the current laws on import and export duties;
  • Consideration to borrow state development investment credits
  • Tax and land rent incentives for small and medium enterprises (SMEs) engaged in the ancillary industry zones and specialized industrial zones; and
  • Increased opportunities to obtain loans for SMEs engaged in ancillary industries.
For those projects located in industrial parks and clusters, use of public infrastructure works and services and assistance in labor recruitment and training is also included.
Incentives for projects involving SME investors also include support in raising technological capacity and human resource development, access to additional information and consultancy, and financial assistance (as provided under the relevant regulations).
In addition to the prioritization policies, if the projects that are to produce high-tech products are certified and meet certain conditions, they may gain additional tax incentives and reductions. Normally, such projects are located in industrial zones, economic zones or high tech parks. Thus, they are also eligible for incentives that apply to projects that operate in such zones.
This article was first published on Vietnam Briefing.
Dezan Shira & Associates is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in emerging Asia. Since its establishment in 1992, the firm has grown into one of Asia’s most versatile full-service consultancies with operational offices across China, Hong Kong, India, Singapore and Vietnam as well as liaison offices in Italy and the United States.
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